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NEAR-TERM MARKET FUNDAMENTALS: May wheat made a new high for the March rally early yesterday, but the wheat market came under selling pressure early in the day session and it sold off over the course of the day. This came despite continued strength in stocks. Funds were buyers in the early going, but this selling dried up by late morning. Weather remains dry in the Lower Plains with a wet forecast for many soft red growing areas of the Midwest today and tomorrow. The condition of the Texas winter wheat crop remained at 57% poor-to-very-poor to start the week as that area again saw little rain. Topsoil moisture levels in neighboring Oklahoma are rated 85% short-to-very-short with the majority falling into the very short category. The wheat crop itself is rated 40% poor-to-very-poor in Oklahoma. In Kansas, the crop is rated 5% very poor, 13% poor, 39% fair, 39% good and 4% excellent. Good excellent readings are 43% this week from 42% last week. Some rains are forecast in the dry hard red winter wheat areas later this week, but amounts are only expected to be up to 1 inch, followed by more dry weather. This week’s export inspections were 22.4 million bushels in wheat, up sharply from last week’s total of 12.7 million. Total inspections to-date stand at 84.4% versus a 5-year average of 79.1%. Inspections need to average 14.6 million bushels each week to reach the USDA’s projection. India’s agricultural commissioner said yesterday that foodgrain production may rise to 229 million tonnes in the marketing year ending in June. This compares to their previous estimate of 227.9 million tonnes. Wheat is expected to be up slightly at 78 million tonnes versus the previous estimate of 77.8 million tonnes.
CASH NEWS AND TENDERS: Iraq is tendering to buy at least 50,000 tonnes of wheat.
WEATHER: Dry weather in central and southern hard red areas again today with more of the same forecast through tomorrow. Rain is expected on Thursday and Friday into the western and southern Plains and this is likely to improve crop conditions. The Midwest looks wet today and tomorrow.
TODAY’S GUIDANCE: Wheat is still the grain market that sees the least amount of benefit from a resurgent stock market and ideas that the economy may be nearing a bottom. It should, therefore, continue to lag corn and soybeans, despite the fact that funds are short in wheat. This is simply because world wheat stocks are still on the upswing and an improved economy could actually reduce demand for food wheat in some markets as consumers become less nervous about the economy and possibly add more protein back into their diets. The fact that KC wheat has also stalled a bit in terms of gaining on Chicago, despite the drought, also suggests that we may see a further pause in the uptrend. First support is near 540 in the May contract with the next support near 535. Today’s resistance is near 555, and then at 570.
